2023 Economy

This is by Steve Rattner in the New York Times on December 28, 2023

1. Inflation Fell, Incomes Rose

Americans still fretted about rising prices, even as inflation subsided significantly. In fact, the prices of some goods actually fell. Gasoline dropped to an average of $3.12 a gallon from a high of $5.02 a gallon in June 2022.

This was not enough to soothe most Americans, many of whom believed their purchasing power was still eroding. Few appreciated that their inflation-adjusted (“real”) incomes rose in 2023 as inflation fell close to the Federal Reserve’s target of 2 percent.

By November, real incomes were 2.7 percent above their January 2021 levels. Moreover, inequality narrowed as those at the bottom saw their wages rise faster than those at the top.

2. The Economy Exceeded Expectations

Nor were Americans moved by the surprising plethora of positive economic news.

The economy was projected to lose 10,400 jobs a month. Instead, it gained an average of 232,000 a month.

The unemployment rate, which started 2023 at a five-decade low, was projected to rise to nearly 5 percent by the end of the year. Instead it ticked up only trivially, to 3.7 percent.

More than 80 percent of economists predicted that 2023 would end in a recession. Instead, the economy is likely to have expanded by a remarkable 3 percent.

On top of that, the stock market boomed. In 2023, the S&P 500 index rose to near record highs, powered primarily by the technology stocks known on Wall Street as the magnificent seven — Apple, Amazon, Alphabet, NVIDIA, Meta, Microsoft and Tesla.